A recent study by IW highlights the top five German cities with the highest living expenses.
A recently conducted price index analysis by the Institute for German Economy (IW) has identified the German cities and regions with the most expensive living costs and those areas in the country where a more economical lifestyle is possible.
Munich locals paying 25,1 percent more to live
The latest price index compiled by the IW, focusing on rental rates and consumer expenditures for items like food, clothing, and services, has formulated a ranking of the German cities and regions with the highest living expenses. Examining 400 regions across the federal republic, the index, using 2022 prices, identifies Munich as the most expensive German city to reside in. In the capital of Bavaria, the cost of rent and living exceeds the German average by 25.1 percent. This elevated cost extends to Munich's surrounding rural areas, including Starnberg, Fürstenfeldbruck, Dachau, and Landkreis Ebersberg, where residents are paying 16.7 percent more than the national average, rendering these areas the second most expensive regions to live.
Frankfurt follows as the third most expensive area, with locals facing costs 15.7 percent higher than the national average. Stuttgart secures the fourth spot, with rental and living expenses surpassing the national average by 14.8 percent. Hamburg concludes the top five, with living costs in the port city exceeding the German average by 11.5 percent.
Berliners are paying 5,5 percent more for rent and living costs
Over the past few years, Berlin has experienced a significant increase in living costs within a short timeframe. Nevertheless, when compared to other major cities in Germany, where expenses surpass the national average by a considerable margin, Berlin residents only face a 5.5 percent increase over that average. However, when considering the costs of rent and utilities alone, Berliners pay a higher premium of 17.8 percent.
Interestingly, among the five cities and regions below the national average, the majority are situated in eastern Germany. Residents in Vogtland, Saxony, enjoy the most economical living costs in the country, which are 9.5 percent lower than the national average. This is followed by Greiz, Görlitz, Salzland, and the sole western city in the most affordable category, Pirmasens, where inhabitants' living costs range from 9.5 to 9.3 percent below the national average.
Despite the lower cost of living in eastern German states, workers in these regions still earn less than their counterparts in the western states. Even more than 30 years after reunification, income inequality is on the rise. According to 2022 figures from the Federal Statistical Office (Destatis), workers in the Neue Bundesländer (new states) earn an average of €13,000 less annually than those in the western states. In the west, the annual gross salary for full-time employees averaged €58,085, compared to €45,070 in the new states. Statisticians attribute this inequality to the higher likelihood of workers in western German states receiving substantial work-related bonuses.